The part taxpayer-owned bank admitted its PPI mis-selling compensation bill
had ballooned by another £700million, the bank now having set aside a total
of more than £4.2billion to clean up after the debacle - £1billion more
than it originally estimated.

Regarding the Libor-fixing affair, Lloyds it said
it was currently not possible to 'predict the scope and ultimate
outcome' of various investigations.

Announcing the results today, Barclays' stand-in chairman Marcus Agius said: 'We are sorry for the issues that have
emerged over recent weeks and recognise that we have disappointed our
customers and shareholders,'

'I am confident we can, and will,
repair the reputational damage done to our business in their eyes and
those of all our stakeholders,' Agius said, reaffirming a commitment to
deliver a return on equity of 13 per cent.

The 7 per cent jump in staff remuneration
- to £5.2billion - included a 21 per cent rise in deferred bonuses,
while staff numbers fell by more than 1 per cent to 139,000.

More...

Barclays shares are up 8.7p (5.7 per cent) to 162.3p this morning, topping the FTSE 100.

Agius remains in his post only while
Barclays searches for a new chief executive and chairman after he and
Bob Diamond quit following a record £290million fine last month for
rigging the Libor interest rate benchmark, sparking fierce criticism
about its culture and risk-taking.

The board is focused on
filling the positions, but gave no update on likely timing. Investors are
keen for one or both of the CEO or chairman to come from outside, to
implement a far-reaching overhaul. Former J.P. Morgan banker Bill Winters
is favourite to be CEO and former UK Cabinet Secretary Gus O'Donnell is
front-runner for chairman, according to industry sources and UK media
reports.

Richard Hunter, head of equities at Hargreaves Lansdown, commented: 'Credit is due to Barclays, where the growing list of political and regulatory woes seem to have done relatively little to stem the bank’s financial progress. The beleaguered Barclays Capital has fared quite strongly compared to its rivals.

'The ultimate fallout from the Libor situation, where future litigation is surely a possibility, remains unknown. The combination of the PPI mis-selling, interest rate swaps and Libor fines have provided a toxic cocktail in both financial and reputational terms, but nonetheless, the company remains committed to repairing each of these individually.'

Scandals: The bank revealed that four present and past senior staff, including current group finance director Chris Lucas, were subject to a new investigation by UK regulators

An inquiry by UK lawmakers into the
Libor scandal showed that Britain's financial regulator had warned
Barclays four months earlier that its culture was too aggressive and
must change. It exposed a strained relationship with regulators, and as
the backlash built, the Bank of England effectively forced Diamond to
resign as chief executive.

What Barclays is doing to rebuild its
brand and restore shareholders' confidence is more significant than the
results, investors said, as the bank beat analysts' forecast of
£3.8billion.

It is reviewing all parts of its
investment bank, people familiar with the matter said, as the Libor
scandal has intensified calls for it to shrink the business. It has
admitted its culture needs to change and has picked veteran lawyer
Anthony Salz to lead a review of practices, expected to be completed
before May 2013.

Four present and past senior staff, including current group finance director Chris Lucas, were subject to a new investigation by UK regulators into fees they received under deals made in 2008, the bank revealed.

It still faces a bill of £450million
to pay compensation to customers misled about interest-rate hedging
products to small businesses. The figure is based on initial estimates
and Barclays said the ultimate cost is uncertain. Barclays was one of four banks which agreed with the Financial Services Authority (FSA) to compensate customers who were mis-sold interest rate hedging products. Also known as interest rate swaps, the complicated derivatives products may have been sold to businesses as protection - or to act as a hedge - against a rise in rates without the customer fully grasping the risks.

The investment bank fared better than
most rivals in a tough second quarter, with income of £3billion, up 5
per cent from a year ago and down 12 per cent on the first quarter.

A key measure for shareholders - return on equity - rose to 9.9 per cent in the period, from 9.3 per cent in the same period last year.

Despite low interest rates and a tough economic climate, the bank saw a slight 1 per cent increase in adjusted income to £15.5billion, helped by higher earnings in both its retail and investment banking arms.

The bank's bad debt charges were flat at £1.8billion. while its exposure to troubled eurozone countries Portugal, Italy, Ireland, Greece, Spain and Cyprus fell 22 per cent to £5.6billion.

Barclays' statutory profit fell 71 per
cent to £759million including the fine, interest rate mis-selling
charge and movement in the value of its own debt.

Earlier this month it was revealed that Barclays gave an £8.75million payoff to former chief operating officer Jerry del Missier, who received the windfall despite it emerging that it was he who told Barclays staff to lower their interest rate submissions for Libor. The bank has claimed Mr del Missier gave this instruction after misunderstanding an email from Mr Diamond following a conversation he had with Bank of England deputy governor Paul Tucker.

Del Missier was the trusted investment banking lieutenant of Bob Diamond, and resigned at the same time as his Bob Diamond.

Lloyds' compensation bill for mis-selling payment protection insurance crashed through the £4billion barrier as it was forced to set aside another £700million to pay wronged customers. The staggering PPI provision for the three months until the end of June is more than twice the £375million put aside in the first quarter.